WASHINGTON (Dow Jones)--The Group of 20 industrial and developing nations should focus more on new threats to financial stability rather than look backward for the reasons that caused the financial crisis, Peter Sands, chief executive of Standard Chartered PLC (SNTDF, STAN.LN), said Friday.
"Clearly we haven't achieved financial stability.... There has been too much fighting the last war rather than dealing with the threats facing us going forward," Sands said at a panel in Washington assessing the work of the Financial Stability Board, the body that advises the G-20 on financial reform.
As G-20 finance ministers meet in Washington Thursday and Friday to discuss the global economy, financial markets are being rattled by increasing investor nervousness over the possibility of world recession and the intensifying euro area sovereign debt crisis, which has hit European banking shares particularly hard. The G-20 pledged late Thursday to do whatever it takes to maintain global financial stability.
Sands said the FSB hasn't been focusing on the right things to bolster financial stability and cited in particular the need to better regulate compensation in the financial sector, as well as to tighten scrutiny over so-called shadow banking and the need to have guidelines for the orderly winding down of troubled cross-border banks.
The FSB is slated to present proposals on these issues at the next summit of G-20 leaders in Cannes, France, in early November.
Even as he recognized that substantial progress has been made in setting new global regulatory standards since the onset of the global financial crisis in 2008, such as new bank capital rules known as Basel-III standards, Sands bemoaned the increasing fragmentation in the way these standards are being put in place.
"Either we don't want to implement [the new rules] or we want to implement them our own way. This leads to confusion and increasing fragmentation," he said, referring in particular to new Basel-III liquidity rules, which are being fiercely criticized by some G-20 countries.
The new liquidity ratios will require banks to hold more government bonds in order to meet their liquidity needs.
"This is not quite as compelling an argument as it was when those rules were first drafted," Sands said.
Source: http://online.wsj.com
"Clearly we haven't achieved financial stability.... There has been too much fighting the last war rather than dealing with the threats facing us going forward," Sands said at a panel in Washington assessing the work of the Financial Stability Board, the body that advises the G-20 on financial reform.
As G-20 finance ministers meet in Washington Thursday and Friday to discuss the global economy, financial markets are being rattled by increasing investor nervousness over the possibility of world recession and the intensifying euro area sovereign debt crisis, which has hit European banking shares particularly hard. The G-20 pledged late Thursday to do whatever it takes to maintain global financial stability.
Sands said the FSB hasn't been focusing on the right things to bolster financial stability and cited in particular the need to better regulate compensation in the financial sector, as well as to tighten scrutiny over so-called shadow banking and the need to have guidelines for the orderly winding down of troubled cross-border banks.
The FSB is slated to present proposals on these issues at the next summit of G-20 leaders in Cannes, France, in early November.
Even as he recognized that substantial progress has been made in setting new global regulatory standards since the onset of the global financial crisis in 2008, such as new bank capital rules known as Basel-III standards, Sands bemoaned the increasing fragmentation in the way these standards are being put in place.
"Either we don't want to implement [the new rules] or we want to implement them our own way. This leads to confusion and increasing fragmentation," he said, referring in particular to new Basel-III liquidity rules, which are being fiercely criticized by some G-20 countries.
The new liquidity ratios will require banks to hold more government bonds in order to meet their liquidity needs.
"This is not quite as compelling an argument as it was when those rules were first drafted," Sands said.
Source: http://online.wsj.com
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